Thursday, November 20, 2008

min from a very, very bad day

Ryan Krueger

04:05:00 PM

No positions in stocks mentioned.

Intriguing Trading Action in SCHW
Charles Schwab (SCHW) is green while the broker-dealer index (IAI) is down more than 5% today. More intriguing to me longer term?

The brokerage analyst I quoted earlier this week in support of SCHW benefitting from departures from brokerage firms is…departing that brokerage firm.

Jeff Macke

04:00:00 PM

No positions in stocks mentioned.

Signs the End is Neigh

* I can't think of anything else to say about this market

* Half an hour ago I went to sell some of the oft-discussed SDS ETF and ended up buying instead. Trades as utterly undisciplined and rock-stupid as that are like hitting on 19 because you "feel a 2". It's really not in your long-term best interest to win trading that way. I got my 2.

* Nothing moves in one direction for as long as this market has been dropping. The jet-stream changes direction more often than the Dow. If it's open, we're going lower. If a company has even a loose connection to financial assets, I can give you 5 rumors about why they're going to zero.

* I was certain we'd seen a bottom in jaw droppingly brainless CEO behavior when the boss of General Motors (GM) asked for $25 billion without having an answer to the question "what are you going to do with it?". Then Citigroup (C) lobbied to reinstitute the ban on short-selling.

* I'd tell you all to be careful into the close Minyans but, frankly, you don't want to listen to me right now. I feel another 2 coming on and I need Adami to drag me away from the table before I wager my children on it.

Todd Harrison

03:53:52 PM

No positions in stocks mentioned.

Oops there it is!

Someone told me when I started trading that sometimes you're gonna be the windshield and other times you'll be the bug. As I watch my hind legs fly by my ears and I taste my last few meals for the second time, I'm reminded of that adage. Nobody--and I mean nobody--is smarter than the market.

The time stamp on my bull costume appendages is S&P 785, NDX 1065 and DJIA 7820, all of which are under water. That, combined with my nibbles yesterday, have made for a rather unpleasant 24-hour P&L. I share this in the interest of full disclosure--it's nosty out there--and to remind you, in the immortal words of Sean Maguire, that "It's not your fault. It's not your fault. It's not your fault."

As chatter swirls that foreign central banks have cried Uncle Sam and redirected their funds to the fixed income markets, I'm watching the clock with one eye and the tape with the other. At the risk of invoking the wrath of the Trading Gods, I'll communicate that I'm carrying home the meat of my exposure overnight. That's a shift in my stylistic approach but, after hoarding cash for quite some time, I'm (cough, wheeze, biting lip) comfortable with that. Famous last words, right?

Sorry for the cloudy compass, Minyans, as you know I take it personally. We'll pick it up manana after some well deserved rest and an eye towards the weekend.

May peace be with you.


Minyanville Staff

03:29:51 PM

No positions in stocks mentioned.

Friday Preview
Friday, November 21


Before: ANN, HNZ, SJM

Click here for the full trading radar

MV Trivia

03:20:00 PM

No positions in stocks mentioned.

Less is More...
If you had trouble getting through War and Peace, forget reading 'À la recherche du temps perdu' or 'Remembrance of Things Past' if you prefer the English translation.

À la recherche du temps perdu, the world's longest published novel, was written by Marcel Proust and published in France in seven volumes between 1913 and 1927.

Congrats Minyan Michael Taillon!

Choose your critter!

Jeffrey Cooper

03:10:00 PM

No positions in stocks mentioned.


We have a potential bearish backtest of a neck line here on the 10 minute S&P chart. However, if price moves up above 795 here, the backtest is off and the pattern is more bullish.

Click to enlarge

If a potential right shoulder on a head and shoulder 10 minute top is offset, the S&P should test toward the HOD, or high of day.

David Dispennette

03:05:00 PM

Position in C Options

All this chatter about another ban on shorts...

I can't resist. I just rolled some dice on Citigroup (C) November $5 Calls for 49 cents.

If something crazy happens, allowing C to recover half of what it lost over last two days and rally to $7 or more tomorrow, I'll make multiples on this shot... otherwise, I crap out (small lot). It really is that simple.

Jeffrey Cooper

03:00:00 PM

No positions in stocks mentioned.

Playing Favorites

A 10 minute chart of Apple (AAPL) today shows a bullish 1-2-3 Swing to a test toward the morning low.

It’s one of my favorite set ups on any time frame. A good risk to reward set up here.

Click to enlarge

Todd Harrison

02:50:56 PM

position in shld

You can't hide your lyin' eyes. And your smile is a thin disguise...

Hammering Hank comes and goes with nary a word about "something seismic." In fact, the meat of his speech was somewhat shifty, offering that it's "naive" to believe the Lehman Brothers failure caused a deeper crisis.

Further to that, he punted Fannie (FNM) and Freddie (FRE) into the lap of the next administration, saying their fate is in Obama's hands, while assuring investors that regulators have the tools necessary to maintain stability.

Whew, and we were worried...

With contra-hour underway and tension levels reaching DEFCON status, here's what I'm thinking as I rub my forehead and nibble on my nubs:

Meow Mix? This is both adorable and very disturbing.

* While I've traded some of my "in the hole" adds from this morning, I'm still leaning long and, as it stands, wrong.

* The combination of auto uncertainty, credit duress, fugly internals and broken levels is paving a prickly path for those with bovine inclinations.

* Sur-prise, sur-prise, sur-prise! You can learn a lot just by watching and along those lines, I'll note that Wal-Mart (WMT), Target (TGT) and Sears (SHLD) are all giggling green in a dicey tide.

* I don't know about y'all but I, for one, could use a break from this shake. I'll be scooting to Baltimore Wednesday for some turkey time as a start. There's something about the laughter of little kids that takes the edge off reality.

* Was Carly Simon a narcissist?

* Remember in 2006 when we said that our biggest concern was that we were at all-time highs but nobody felt like we were at all-time highs? This is the other side of that trade, when we're swimming in the abyss and nobody feels like it'll ever get better. Make no mistake--this will take time and it will take work--but to get through this, we needed to go through this. That will likely fall on many deaf ears but we, the Minyans, need to remember that. Sometimes, perspective is all we have to sustain us.

* Breathe, friend, we're almost there.


Kevin Depew

02:45:00 PM

No positions in stocks mentioned.

Under the Hood

* New point and figure sell signals are leading new buy signals 187 to 4.
* Yes, 1-8-7... on an undercover bull.
* Overall sell signals are leading buy signals 620 to 5.
* Yep, that's a washout.

Bennet Sedacca

02:40:29 PM

No positions in stocks mentioned.

30-year update

I happen to be in the camp that thinks the 30-year yields are bottoming.

I applied the inverse of the 30-year yield (its P/E) ratio to establish the correct valuation for bonds.

Click to enlarge

I calculate that the top of the channel from the 1985 high in yields/low in price to equate to 27.31 P/E or 3.66%. We are now at 3.71%.

I would be a seller of the 10-30 year sector here.

MV News

02:19:45 PM

No positions in stocks mentioned.

Street Vibes

* General Motors (GM) and Ford (F) are at the top of the radar. Everyone's watching the 2:30 pm press conference.

* The financials have been weak all day. Citigroup (C) is in focus and the fact that it wants the SEC to reinstate the short-sale ban and the uptick rule isn't exactly a good sign.

* Seeing more weakness in large cap consumer staples. We're hearing gaming and cruise lines continue to be sold because of the weak consumer thesis.

* In ETF land, retail (RTH), REIT’s (IYR), and small caps (IWM) look positive. The emerging markets (EEM) and bonds (TLT) look weak.

Michael Paulenoff

02:05:00 PM

No positions in stocks mentioned.

Downleg Near Completion in Q's

My pattern and momentum work in the QQQQ argue that the downleg from the June 2008 recovery rally peak at 50.61 is at or is very near completion ahead of a potent recovery rally period that should propel the Q's into the 33.00-34.00 target zone.

Can we loop down and retest this morning's low at 26.00 -- and possibly make new lows? Definitely, but relatively marginal new lows should be short-lived prior to a vicious snapback rally period. (12:45pm EST, 27.21)

Click to enlarge

Fil Zucchi

01:56:03 PM

No positions in stocks mentioned.

Short selling ban?!?!
Of course this is not just chatter, tomorrow is options expiration is it not? And Hanky speaks in 5 minutes...

MV News

01:50:23 PM

No positions in stocks mentioned.

Not Just Chatter
Citigroup (C) is lobbying lawmakers, SEC to resinstate short selling ban and uptick rule. (WSJ)

Bennet Sedacca

01:35:00 PM

No positions in stocks mentioned.

Credit Market Update

Spreads across the board continue to blow out.

CMBS now trading near 20%.

Corporates in every sector now widening, notably telecom, financials and retail.

Munis are getting hammered.

Junk? Pretty close to +2000.

Mortgages? Rallying, but lagging.

Until this improves, every equity rally is a mirage.

Jeffrey Cooper

01:30:00 PM

No positions in stocks mentioned.

3 Point Rising Trendline

The S&P has carved out a 3 point trend rising trend line on its 10 minute chart.

If that breaks another flush out could take place.

See 10 minute chart today here.

Click to enlarge

Ryan Krueger

01:25:00 PM

No positions in stocks mentioned.

The Roman Goddess
I am tip-toeing back into the arms of my only mistress, Ceres, the Roman goddess of harvest. I have put out a few bids for a few Agricultural commodities.

The CRB below is back to 2003 levels (the Cornhuskers by comparison have had three coaches since then). The fundamentals are not back to those levels. They are better. The deflationary (non)solutions being printed on paper now will only serve to inflate the chase for real assets later.

Click to enlarge

Todd Harrison

01:18:33 PM

position in wft

Answers I Really Wanna Know...

* Do you think folks will be bummed if we don't serve roasted rat at Festivus?

* How much of this rally is due to the circulating chatter that a three month short sale ban will be soon be implemented?

* Haven't we seen this movie before?

* Right before the September expiration?

* Or will we see some other "seismic readjustment?"

* If you were running an emerging media concern and they asked you to do a television spot on Sunday at 5pm--right in the middle of the afternoon games--what would you say?

* NYSE internals are still struggling with three red for each ahead?

* Did I really miss another week of physical therapy on my knee?

* Is anyone else really excited for Thanksgiving?

* Is it possible for a stock (Weatherford (WFT)) to be down 5% and trading dry?

* If we keep saying "the nomination was honor enough," will it appease the mojo Gods enough to give Hoofy and Boo their well deserved Emmy?


Jeffrey Cooper

01:10:00 PM

No positions in stocks mentioned.

S&P Lows

As offered earlier the prior S&P low was 818 would be an important inflection point.

Only a rally above 840 will trigger the big buy stops and ignite a 20% rally.

Ryan Krueger

01:04:35 PM

No positions in stocks mentioned.

Homework Time!
When 8 of the top 10 most actively traded securities are ETFs and when the trading volume on all ETFs as a percentage of all equity trading volume has soared from the 20’s to 30’s and now in the 40%’s in the last two months alone... it may offer no clue about any key level, but I cannot help but think you have an exquisite and unusual opportunity to do individual stock work.

In good or bad markets it will prove more valuable than ever before as long as groups are being traded with no regard to underlying individual stocks. This is not another valuation call on stocks, it’s a valuation call on research.

Astonishing figures.

Long: Homework

David Dispennette

12:58:21 PM

No positions in stocks mentioned.

BIDU November $100 Puts

I could probably wait until tomorrow and watch them expire worthless, but I'm bidding for them now at $1 to book my $2 gain for the second time this week, only because at $105.56 this morning I was starting to get a little clammy in palms.

This is a sign I may not have wanted to be the owner of 5000 Baidu (BIDU) with a cost average of $116.

MV Trivia

12:30:00 PM

No positions in stocks mentioned.

A Time to Read
The first book ever published was the Bible, which springboarded millions and millions of other literature to be put into production.

What is the world's longest novel?

Be the first Minyan to answer correctly!

MV News

12:23:11 PM

No positions in stocks mentioned.

Midday News

* European Markets Closing Prices: FTSE: -2.9%, DAX: -2.8%, CAC: -3.5%.

* In December, the SEC may approve exemptions for credit swap clearing. (DJ)

* According to Treasury Officials over 1,000 private banks have applied for TARP. (DJ)

* JP Morgan (JPM) plans to cut 10% of its investment banking jobs. (Reuters)

* The UAW's Ron Gettelfinger, asked congress not to adjourn before reaching an agreement on the automakers which he says could collapse without assistance. (WSJ)

Kevin Depew

12:15:00 PM

No positions in stocks mentioned.

It Ain't Over...

...til the fat lady sings.

Just a note that intraday looks like another move to the lows, possibly below. This can happen at important market lows prior to afternoon rallies. It is never easy, but a move through the intraday lows would likely shake out some of the weakest holders.

Again, the daily exhaustion signals and divergences continue to pile up so be careful not to manage your daily holdings against intraday timeframes.

Todd Harrison

12:07:45 PM

No positions in stocks mentioned.

I've got no reason for the things I fear. The things that plague me when I see and hear.

Jenny said turn off the radio. Jenny said turn off the light. Jenny said turn off the video. If only we listened to Jenny, maybe we we could let it go, let it go, let it go. Let it go, let it go, let it go.

Some top-line vibes as Cowboy Mouth blasts in the background:

* Have no fear, Jack Bauer is here.

The semis, which were the first sector to flip the upside switch, is quietly up 3% (it ain't what it used to be but Hoofy will take what he can get in this environment).

Of course, that sword swings both ways. Banks? Swvft! A finski. The drillers? Thump! 9%. Silver? Surfing 3% lower (we haven't dabbled in silver in years but it's starting to vibe on our collective "behind the scenes" radars for a trade).

Market psychology is a funny beast, eh? When we were 50% higher last year, the bears were taking stabs and covering the first pullback (as the news was generally constructive). Now, the bulls are taking stabs and selling the first rally (as the news is grim and grimmer).

The only difference between a mistake and a lesson is the ability to learn from it.

330 Minyans cut a rug at last year's Festivus and we're on pace to eclipse that this year (which is a testament to our community given the economic climate). Word to the wise, Yo, we'll prolly close registration as we approach the 3-handle.

Speaking of the community, I would like to take a quick moment to offer a hearty congrats to Team Minyanville for having the second highest year-over-year traffic growth of any financial website on the planet.

Disney (DIS), as a teen, is on my laundry list. Ditto Yahoo (YHOO) as a hat size, particularly after side-stepping the meat of the downside heat. Perhaps there's some serendipity in that?


Jeffrey Cooper

11:55:00 AM

No positions in stocks mentioned.

Rip This Joint

Back through the prior low of S&P 818 and especially 824--one of the "master squares” will rip this joint.

You say 20% rally lickety split?

If the above plays out.

Click here.

Terry Woo

11:50:00 AM

No positions in stocks mentioned.

Hoofy n' Boo
A few updates from this morning's Two Ways to Play:

From the Bull Pen:

A tactical approach remains the strategy for bulls in this environment. Consider Research In Motion (RIMM) to the upside; sell stops can be set below $44.

RIMM is trading -1.10% to $44.83.

From the Bear Cave:

Fear is in the air. But it will subside. And so will the flight to Treasuries. Bears can consider playing the Ultrashort 20+ Treasury ETF (TBT); sell stops can be set 2 points from entry.

TBT is trading -4.64% to $53.25.

Bennet Sedacca

11:42:00 AM

No positions in stocks mentioned.

Closing in on some initial targets

Ever since I turned negative on stocks I have been trying to guess where the market might bottom.

The issue is that as yields on high quality fixed income (and low quality for that matter) continues to rise, the competition for stocks gets tougher. Lump in the fact that the 'E' in P/E becomes more elusive, the case for stocks remains grim.

About six months ago, I wrote that I thought a likely eventual bottom for equities was in the 450-500 range. I have since lowered that to 350-400 but that could be a couple of years off.

For now, I continue to focus on a 650-700 interim low and have been using November 24-25 as a window to buy for a trade. But just a trade. If we got there, 775-815 would be likely resistance.

As we fall, I am not necessarily becoming bullish, but most definitely less bearish.

What happens with Citigroup (C) (likely soon) is key to an emotional short tom low in my opinion.

Jeffrey Cooper

11:36:03 AM

No positions in stocks mentioned.

Stein & Handle

Watching for a possible Stein & Handle pattern on the 10 minute S&P, which may be putting in a handle now, on a back test of short term trendline today.

Jeffrey Cooper

11:20:00 AM

No positions in stocks mentioned.

W V on Apple

An inverse head and shoulder pattern on Apple (AAPL) counts to 90.

Will it be there for expiration?

The bigger picture on AAPL looks like a W V which often times carves out a significant low.

Click to enlarge

Adam Warner

11:12:37 AM

Position in SKF

Thinking about SKF?
So I'm thinking maybe it's time to buy some puts in these Inverse Double Latte's, Then I look at the SKF board and... whoa. Hair raising.

The Dec. 240 straddle, roughly ATM not, is about $109. Yes, that's $109 for a straddle with 29 days to go. 4 of them being a long weekend next weekend, although hard to make a case the Thanksgiving break will mean anything this year.

But hey, if that seems pricey, consider the November 240 straddle, That's now $34. It expires tomorrow.

You'd think buying the Dec. vs. shorting the Nov. makes some degree of sense, I mean conceptually if you're getting a third of the price back in under 2 days of trading, what can go wrong?

Well, volatility is insanely volatile. As is the stock right now. Where would the Dec. straddle trade if SKF moves 30 from here? Or 40 from here, or 60 from here? That's the question you have to answer.

Jeffrey Cooper

11:02:13 AM

No positions in stocks mentioned.

Right Shoulder

The SDS looks like a right shoulder checking the 10 minute chart.

While the S&P 10 minute chart looks like a possible inverse H&S with the head at/near the 780 square mentioned earlier.

Todd Harrison

10:51:02 AM

No positions in stocks mentioned.

It's Not Easy, E!

Don't believe the hype, Yo, all is not lost. In fact, it's my fiduciary responsibility to inform ye faithful that the entire Minyanville editorial desk--present company included--has gone old school in our attempt to shake up the mojo. That's right, shoes are off in the city of critters, one and all and all for one. Call it a team effort. We do it because we care.

Some udder thoughts as we find our way:

* SOX. Green.

Hoofy is watching the dollar, for he knows that any sustained lift must include a lower greenback.

Breadth? There musta been onions in them eggs as it's 5:1 negative (despite this Snapper attempt).

If there's a smarter digital media mind out there, I've yet to meet him or her.


Citigroup (C) (-22%) reminds me of the visual we used all summer of the financial dike springing alotta holes with only so many fingers available to plug them.

N's over S's, if only for a trade. I still think big beta has the potential to lead the upside speed if and when performance anxiety begins to percolate.

Time and price, friends, time and price.

Pepe just told me that he's putting his shoes on to go to the men's room. Selfish! If this rally fails, you all know who to blame.


Jess Thompson

10:40:04 AM

No positions in stocks mentioned.

Daily Forecast for the S&P 500 (SPY)

Daily Order Flow Briefing (written the evening of 11/19/08):

* Daily Review: For the Wednesday session, my firm suggested that a rally extension from Tuesday's bounce could only occur if "Daily buyers now lift SPY back above OO... to attract higher timeframe bids. "[My firm] also alerted our readers to "be aware that a second sell-side price rejection (and failure at OO (see the chart below) can lead to aggressive selling and a press to new lows going into week's end."

* Recall last Thursday's (11/13) reversal failed to extend higher as offers stacked at O1 (see chart) capped the rally and that failure led to a spell of liquidation. The context going into Wednesday was similar with O-level offers stacked right overhead as resistance and with the near-term trend (and intermediate) already down.

* Tuesday evening my firm suggested the near-term would remain down unless SPY regained OO on Wednesday. When the early rally attempt on Wednesday to extend Tuesday's rally was rejected, SPY rotated immediately lower then congested where bids were stacked at D1. Late in the day, those D1 bids were finally absorbed by offers leaving the SPY nowhere to go but into a closing tail-spin.

* Weekly Recap: Last Sunday, in my firm's pre-Monday brief, we suggested the control point for the entire week's price action would be what happened relative to OO (87.85) in the first couple of days of the week. After Monday's failure to hold OO, we said Monday evening to "expect bears to remain dominant in the near-term, unless bulls can reverse the weekly range up and prove price acceptance above the OO offer line". We consider the most dangerous periods to hold longs are those where the intermediate trend (which turned down 11/12) turns down in a primary bear market.

* Performance Demands: Wednesday's price action diminished the potential for bulls to neutralize bear dominance this week, therefore with all three timeframes (near-term, intermediate and primary) down, we expect a sell-side order flow bias to remain dominant, until bulls can prove otherwise by turning the near-term trend back up at OO (see chart).

Click to enlarge

David Dispennette

10:31:41 AM

Position in NYX, V, ISCA, NYX, BIDU

Managing the Tide
It seems like two months ago that I received an IM from Terry Woo saying what a great trade it was last Thursday when I covered all my shorts in First Solar (FSLR), Potash (POT), Celgene (CELG), Gilead (GILD), and Carnival Corp (CCL) before an ensuing one day rally.

Since then, I lost on my shot at Fuel Systems (FSYS), Energy Conversion Devices (ENER), Ultra S&P (SSO) and Ultra Dow (DDM), not to mention watched all my shorts head much lower.

I continue to hold my NYSE Euronext (NYX), International Speedway (ISCA) short, and Baidu (BIDU), which I continue to trade options around and am not sure if I want to get exercised on my $100 Puts or not, to add remaining half of position.

With that being said, like Todd, I too am continuing to buy stocks I don't mind holding if this attempt to trade them turns against me.

I'm buying some more NYX, adding Visa (V), and re-establishing position in SSO and DDM, which I'll trade if I get a quick 25% pop over next week.

Todd Harrison

10:24:55 AM

No positions in stocks mentioned.


There's alotta eye popping elements nestled in today's Art Carnage. In no particular order.

* Morgan Stanley's (MS) market cap just dipped below $10 billion, which is below the amount it borrowed from the government last month. Think about that for a second.

* General Electric (GE) just lost Bar Mitzvah status under $13.

* A 57 cent loss in General Motors (GM) is 21%.

* The CRB has organically split two for one since July.

Twenty beats your five, Citigroup (C). Five.

To be sure, nobody has ever seen anything like this--FDR didn't know what a derivative was--and we're in unchartered waters. It's scary, it's depressing and it's all consuming but don't give up--don't ever give up. Now, more than ever, is when lucidity will serve us in good stead.

It's possible that Dubya and Hank have tossed in the towel and passed the lame duck, er, buck to Obama. Still, please remember that the greatest trick the devil ever pulled was convincing the world he didn't exist. Expiration looms large tomorrow and IF there are any bunnies left in the hat, they'll be pulled in front of tomorrow morning.

I continue to trade from the long side. Not profitably at it stands, but that's what I'm doing for better or for worse, with two legs in my bull costume as of this morning. It's my sense that S&P 840 needed to break in order to shake the trees, clear the seas and set the stage for a potential year-end lift.

Engine room, more scream!


Jeffrey Cooper

10:12:21 AM

No positions in stocks mentioned.

Double Down Warren

We’ve all been in this position at one time or another: does Warren double down on Goldman Sachs (GS) at 50?

Does he get a free drink with the double down?

MV News

10:01:52 AM

No positions in stocks mentioned.


* November Philadelphia Fed -39.3 vs -35.0% consensus, prior -37.5

* Oct Leading Indicators -0.8% vs -0.6% consensus

Kevin Depew

10:00:00 AM

Position in QQQQ


It appears that, like the Nasdaq-100 (NDX) yesterday, Google (GOOG) has also qualified its break of the 38.2% TD Absolute Retracement level.


Again, this is not today's business. But I believe it bodes ill for the much longer-term price prospects of Google (GOOG).

Jeffrey Cooper

09:50:00 AM

No positions in stocks mentioned.

Wheel of Price and Time

Note that S&P 738, "vibrates" of October 11th and is a harmonic of 851 and 971.

Click to enlarge

Todd Harrison

09:44:41 AM

position in energy proxies

Gate Sniffage!

Jeezums, is it the trading day already? Seems like just moments ago we were signing off from the Hump Day frump. Alas, the flickering ticks are back and baby, they're better than ever. Some top of the morning vibage as I put the finishing touches on my opener while consuming bagels, shmear and a hot chocolate for good measure:

* S&P 770-840 is the new range. Mr. Valentine has set the price with a conscious nod that technicals take a back seat to the structural and psychological metrics.

* The first thing that jumped out on the opening? No, not the 5% drop in crude (I'm an aggressive buyer, for a trade)--it was the financials, which spurted green before getting punched in the throat again. Maybe something, maybe nothing but certainly worth watching.

* Other green beans in the Red Sea? Wal-Mart (WMT), Target (TGT), KLA Tencor (KLAC), Amgen (AMGN), Amazon (AMZN), Cisco (CSCO) and Texas Instruments (TXN).

* There's no hiding in the 'Ville and as such, I'll raise my hand and say "I was wrong (early) in nibbling yesterday." With that said, we mused last week that the break of S&P 840 might be a necessary precursor to a rally as everyone had their stop-loss set there.

* I'm no Polly, Anna, but I'm slipping two legs into my bull costume (50% conviction on the upside) with hat in hand and a nod to the Gods. Give it to me baby.


Kevin Depew

09:40:22 AM

Position in SPY

Analog Update

We haven't checked in with the S&P 500 1971-74 analog in a bit. This chart has been floaating around in various Bloomberg forums for months now. Here it is as of today:


Jeffrey Cooper

09:30:00 AM

No positions in stocks mentioned.

Just One More Thing

The S&P 780 level.

776 and change was the daily closing low for the bear in October 2002.

Just as 777 was the DJIA low in 1982.

Minyanville Staff

09:23:38 AM

No positions in stocks mentioned.

Vibes from Minyan Tony "Snoop" Dwyer of FTN Midwest
My near-term tactical call is now the same as my intermediate term fundamental call – I’d recommend that long/short funds stay as light as possible in exposure and long only funds stay as neutral to benchmark as possible. As I’ve been highlighting over recent days, weeks and months – the credit markets continue to be dislocated and getting worse despite all the efforts of the global central banks and governments. The three toes I "dipped into the water" around S&P 500 (SPX) 840-850 got eaten by piranha as the major equity indices broke down from the clear trading range I’ve been highlighting and basing my tactical call on.

Again, I’d caution against becoming heavily short or overly defensive in sector weighting because short covering rallies will be extraordinarily sharp and be led by those areas many would currently want to be underweight or short. The most recent example of this idea was last Thursday, which saw the S&P Energy Sector down in the morning, only to see an 11% short covering rally by the end of the day. That kind of action is extraordinarily difficult to predict, especially given the current volatility and liquidity in the market place.

The bottom line is that my tactical view is the same as my fundamental view has been – I am again "out of the way." From an intermediate-term fundamental position, I’d continue to strongly recommend remaining "out of the way" until there is significant and sustainable credit market improvement. Absent improvement in the credit markets and without a clear trading range, trying to pick a turning point is simply a guess. Clearly, I’ll back at this time as a good one to become invested, and that is my intention, as long as there is a tactical or fundamental reason to back it up. The trading range that dictated my tactical position was broken and the non-government directed credit markets are at their worst levels of this entire crisis.

As I said the day following Warren Buffet's NY Times "buy the market" article – when we look back 3-5 years from now, the equity market should be well above current levels given the Treasury and Federal Reserve actions taken to fix the economy and credit markets, but I’m trying to avoid buying blindly without reason in order to miss the kind of drops investors would have experience following Mr. Buffets lead to date.

Jeffrey Cooper

09:15:00 AM

No positions in stocks mentioned.

Pennsylvania Avenue?

180 and 1800

I just posted the harmonics of May 19th and 780 S&P.

Interesting that we are 180 degrees in time from that May 19th peak where the slide began and that at 780, the S&P will be 1800 degrees (360X5 squares) in price from that May 19th 1440 high.

Kevin Depew

09:05:00 AM

Position in SPY, QQQQ


Well, here we are.

Reminder, the 50% TD-Absolute Retracement level for S&P 500 (SPX) is 777.21. Because yesterday was a lower close than the day before, even a move through that level today will not "qualify" the downside break. That is what passes for "good news" these days.

The Nasdaq-100 (NDX) is a different story. The downside break through 1098 was qualified yesterday. The confirmation today will be a lower open AND a low that is lower than the open. Those are the rules.

Regardless, with the buy setup on the daily chart that was perfected yesterday, there is the probability of a 1-4 session counter-trend move higher.

Again, the posture I have is longer-term bearish and short-term bullish. Today has a capitulatory feel to it this morning, particularly with yields collapsing, the dollar higher and crude off 6%. Across the spectrum there are signals on daily charts suggesting all these moves as they stand are nearing important exhaustion levels.

Of course, I am very much aware that the mistake that has been made over and over by many this year is not being bearish enough. We shall see.

Jeffrey Cooper

08:50:00 AM

No positions in stocks mentioned.

Bearish Changes

Yesterday's break of the October 10th low and the new closing low in the S&P seems especially bearish because:

1) This is options expiration week, which typically closes on the upside.

2) Last Thursday's Key Reversal has been broken.

3) With Wednesday’s failure, last Thursday shapes up like a textbook Misdirection Day.

At the same time it should be important that today/Friday is 180 degrees in time from the important May 19th high of 1440 S&P

Five cycles of price below 1440 is 780. In other words today/Friday line up with the price of 1440 and 780 while we are opposition or 180 degrees in time from the May 19th high. A down open that tags 780 and holds a first hour low and turns up may forestall an undercut of the 2002 lows.

It was my hope and assumption that a large counter trend rally would play out prior to undercutting the 2002 low based on time/price and pattern. However, yesterdays break changes things and when things change you have to change.

Be that as it may I think the square out from May 19th shows we are near SOMETHING.

MV News

08:40:00 AM

No positions in stocks mentioned.

Morning News

* GMAC has submitted an application to participate in the TARP program. (WSJ)

* Citigroup (C) will buy $17.4 billion in structured investment vehicles resulting in a $1.1 billion write down. (WSJ)

* In a surprise move, the Swiss National Bank cut its key interest rate by one percentage point. (WSJ)

* Saudi investor Prince Alwaleed bin Tala bin Abdulaziz Al Saud has increased his stake in Citigroup (C) to 5% and says he gives management his full support. (DJ)

* General Electric (GE) is seeking funds from four Assign sovereign wealth funds.. (Bloomberg)

MV News

08:31:49 AM

No positions in stocks mentioned.


* Initial Claims 542K vs 505K consensus, prior revised to 515K from 516K

* Continuing claims: 4012 k. Prior revised to 3903 k from 3897 k.

Kevin Depew

08:29:29 AM

No positions in stocks mentioned.

Where We Stand

Below is where we stand with the point and figure bullish percent indicators for equities, based on Investors Intelligence data.

* NYSE Bullish Percent: Os (Negative) 16.7%
* S&P 500 Bullish Percent: Os (Negative) 19.4%
* Nasdaq Composite Bullish Percent: Os (Negative) 14%
* Nasdaq-100 Bullish Percent: Os (Negative) 19%
* Russell 2000 Bullish Percent: Os (Negative) 17.6%
* NYSE High-Low Index: Xs (Positive) 4.2%
* Nasdaq High-Low: Os (Negative) 1.1%

Jeffrey Cooper

08:05:00 AM

No positions in stocks mentioned.

Uncomfortably Numb

The velocity of the leg down in the GSCI, The energy-heavy Goldman Sachs Commodity Index , is unequaled in the history of commodity trading. Time is running out for this particular leg to end. This week should tell us whether or not some kind of a low is being carved out and bear market rallies will erupt.

On Wednesday the GSCI made another new bear market low. This low was just 2 points above the important January 2007 bottom. Is capitulation at hand as this inflection point is neared.

I bring this up as it dovetails nicely with the idea of a possible capitulation at/below the 2002 S&P lows now that key support at 840/850 has been lost on a closing basis.

When the market turns, all markets should turn together like a school of fish so continue to watch gold, oil and the dollar for signs of a reversal in stocks.

Minyanville Staff

07:53:46 AM

No positions in stocks mentioned.

On Tap Today
Thursday, November 20


08:30 Initial Jobless Claims
08:30 Continuing Claims
10:00 Philly Fed
10:00 Leading Indicators





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MV News

07:12:14 AM

No positions in stocks mentioned.

Good Morning Minyans
Traders buckle up for thristy Thursday as they find foreign markets selling off.

Asian trading closed with the Hang Seng -4.04%, Nikkei -6.89%, Sensex -3.68%, Taiwan -4.53% and Shanghai -1.67%.

Across the pond, we see the CAC -2.21%, DAX -2.40%, FTSE -1.94%, ATX -4.08%, Swiss Market -3.49% and Stockholm -1.94%.

Over in commodities, crude oil is trading down -1.28 to 50.44 while gold is up +7.80 to 743.80 this morning.

Good luck today!

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